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T C A Srinivasa-Raghavan: Fouling your own nest

Economists are bringing a bad name to economics

T C A Srinivasa-Raghavan 

T C A Srinivasa-Raghavan

It always happens. Eventually, the practitioners bring discredit to their chosen professions. Whether it is religion, politics, climate change, sports, or whatever, it happens with unfailing regularity.

Usually, however, the said practitioners restrict themselves to their own disciplines. You don't see them laying claim to other specialisations.

But economics is an exception. If you look at its history over the last 60-odd years, it has behaved just as parasites do - drawn sustenance from others in order to stay alive.

In the 1950s and 60s, economists turned to mathematics and physics for making the claim that economics was a "science". To give you just one bizarre example, one of the problems they set out to solve in growth theory used the calculus of variations and geodesics! If there was a plausible explanation for explaining economic growth in terms of distances between curved surfaces, it escaped most people.

And when maths and physics had been sucked dry, they turned to statistics in the 1970s and 1980s under the rubric econometrics. The "econometricians" themselves were providing many useful tools of analysis but when the economists learnt to use these tools, it was like monkeys learning to use Vernier calipers.

Since then, they have left no discipline alone: law, sociology, psychology - you name it and you will find droves of economists chattering away. Inevitably, as the horizon has expanded, so has the number of charlatans.

Economics today has the largest numbers of the equivalent, if you will, of fake sadhus, babas and maulvis. And like them, most economists today are happily ignorant of the basics.

One very well-known economist, for example, wrote in a very well-known report a few years ago that it is sensible to appreciate the currency when there is a current account deficit. Aiyyo, Amma!

Confujun to hai utter

One problem is that no other discipline masks mediocrity as effectively as economics does. In fact, sometimes, it even parades it as brilliance.

Is it any wonder, then, that a total pragmatist like Narendra Modi has no time for the mumbo-jumbo that economists gurgle forth? Is it any wonder that Atal Bihari Vajpayee would ask, "parantu yeh sab hoga kaise?" Even Manmohan Singh who is an economist had no time for solutions that could not be attempted.

Overall, in the immortal words of Amitabh Bachchan, "Confujun to hai utter." In a large measure, this is because no other discipline is quite as fickle in its fashions or as cyclical or even as blind as economics. Every 10 years or so, it changes not just the beat but also the tune.

For example, inequality is back on the agenda now as if it is the only thing that matters. So are market failure and, therefore, state intervention and public investment. How much longer before we get back to industrial policy and planning?

And along with all this, we now have a new thing called "sustainable" development. True, that it is a bad idea to ruin the earth but you know what? Not once in all the literature on this subject will you find a mention of Thomas Malthus.

The fact that there are too many people on earth is not a fit topic in the expanded area of economics called "sustainable" development, which, thanks to the vast number of humans, has become an oxymoron. With these many people, you can't have "sustainable" development.

The only discussion I have seen of the population problem is by Bjorn Lomborg, who made a name for himself by pouring much scorn on climate change some years ago. And what does he have to say? Transfer populations from surplus areas to deficit ones. Yeah, sure, and what about Wolfgang Stolper and Paul Samuelson?

Quo vadis?
Soon after the 2008 financial crisis, economists tried to figure out what was wrong with the subject. They confined themselves mostly to macroeconomics and, not surprisingly, got nowhere because what new things can be said about a subject with just six or seven variables?

But that was not the main problem. Where they went wrong, in my view at least, was that, instead of asking what was wrong with economics, they should have asked what is wrong with economists.

This is what happens in every other field. For example, physicists, chemists, astronomers and so on don't start questioning their subjects. They look at the stock of human capital in their fields instead.

There are too many economists specialising in increasingly narrow and meaningless areas with statistical tools that pay no attention to contexts - political, historical, social and, of course, paradoxically, economic. The eclipse of theory has also led to mediocrity posing as genius.

Most people I have shown this column to say it is a rant, which it is. But is it justified? Only economists should answer that question.

First Published: Fri, December 26 2014. 22:44 IST